The complete guide to Copy Trading

I made over 23% annual profit last year, with no trading experience, just by automatically copying the trades of successful professional traders.

Have you always wanted to start investing but never knew where to start? Have you wanted to trade stocks but afraid of the learning curve? Or do you already have a portfolio of investments and are just looking for something new? If you answered yes, then you should take a look at CopyTrading.

For the past few years, I’ve been using Copy Trading to generate returns in excess of 20% per year. And I’ve been doing it without extensive knowledge of stocks, forex or investing. That’s why I love copy trading. I’ve built this site to share with you what I believe will be the future of investing.

So read on to learn more about copy trading. If you get stuck or have any questions, feel free to shoot me an email.

What is copy trading?

It’s a simple concept – whenever an professional trader opens a trade in their trading account, your account will automatically open that trade too.

For example… Let’s pretend there is a professional trader – we’ll call him Steve. Steve spends his days analysing markets to see which assets will be worth more in the future. He buys the asset (lets say Apple shares) at a low price, and sells them at a higher price in the future. This is how Steve earns a living.

With Copy Trading, every time the professional trader, Steve, makes a trade, a similar trade will be opened under your account too.

All this works Automatically. Thanks to the advent of Copy Trading platforms like eToro, you don’t need to manually copy trades. You simply “copy” a the trader, and now their trades will be mirrored to your account. So whenever Steve makes a profit, your account will too.

Where to Start Copy Trading

The place to begin your copy trading journey is on the worlds largest Social Trading network eToro. eToro is what you’d get if you combined a stock broker and a social network. The result is a platform where everybody’s trades are available to be viewed. But most importantly you and automatically copy the trades of any investor on the network.

I’ve been using eToro for the past 5 years and I’ve put together a comprehensive review of etoro here. Although I’ve tried out some of the other copy trading platforms, I haven’t found one that works aynwhere near as well as etoro does. I’m excited to see more competition in this space, but so far it is still in the early stages.

Create your etoro account here

You can sign up to eToro for free.  When you sign up using the link below you’ll receive $100k in virtual money that you can use to practice trade and follow along with this guide:

Sign up to eToro Here

What is costs to start copy trading

The good thing about about copy trading is that it takes relatively little capital to get started. In the past, investing in hedge funds or term deposits would require thousands of thousands of dollars to get started, and then your money would be locked away and not accessible to you.

With Copy Trading you can get started with just $200. The minimum amount to a copy a single trader on eToro is $200. If you’re looking to copy a few people than you’ll obviously need a little more and this all depends on how much you can afford – never invest money you can’t afford to lose. Copy Trading 2-5 people will diversify your portfolio.

You can start and stop copying people anytime you want so you’ll always have access to your capital.

The Advantages of Copy Trading

Although copy trading is a relatively new concept, the advantages are already well proven. During the Brexit event, the majority of etoro investors made a profit, even though the world markets were wiped out.

Here are just some of the advantages of copy trading:

  • You’ll learn about trading – The best way to learn about investing and trading is by watching an expert. With copy trading you’ll see first hand how a guru trader works. The best traders on etoro, often share why they’ve made certain trades to help educate you.
  • Diversification – If you copy trade 5 people on etoro, and say each of these 5 people have opened 10 trades. You now have a portfolio with over 50 positions. Copy Trading helps diversify your investments. All you have to do is ensure you’ve copied top performing investors.
  • Beginner Friendly – Manually opening and closing positions requires a lot of experience in investing. It takes years of learning to be able to consistently profit from trading. Copy trading allows you to tap into this knowledge without needing to know a lick about trading.

Read More: 5 Reasons why you should be CopyTrading

How to make money Copy Trading

So how do I actually make money from Copy Trading? Well I follow between 1-3 traders at any one time. When the trader makes a trade, that same trade is copied over to my account as well. If the trader makes money, I do to. That’s how simple it is.

Read More: Find out how much money you can make Copy Trading

Let me explain a bit more about to find traders to copy…

How to find people to copy

Etoro includes tools that allow you to filter and find traders who meet your goals. Here are a few search parameters that I recommend:

  • 10-30% annual return – It’s ok if a trader dips below 10%, all investors will have bad months. But what you should be concerned with are traders who have a 12 month return of 80%, 100%, 200%+ returns. These dangerously high numbers are usually the result of an inexperienced investor using too much leverage and simply getting lucky. They won’t be able to replicate these results in the long run.
  • 1 Year Trading History – I don’t copy traders who don’t have a trading history of at least 1 year. Otherwise I won’t know if they can perform in the long run
    Active Traders – Look for traders who make at least 1 trade per week. Active traders are more likely to be working hard to grow your copy amount, rather than lock up your money in one or two trades.
  • Low Risk Score – Any trader you copy should have a low risk score. Lower risk scores means a trader is using sensible trading practices.